2024 (2) TMI 682 - AT - Customs

Valuation of imported goods - electronic goods including branded and non - branded flash memory cards - rejection of value declared by the appellant - redetermination/enhancement of value of goods as per NIDB data under Rules of Customs Valuation Rules, 2007 - Confiscation - penalty - HELD THAT - It is observed that the Custom Valuation Rules outline a detailed chronological methodology that should be adopted in order to reject and re determine assessable value. Section 14 of the Customs Act 1962 read with Custom Valuation Rules makes it abundantly clear that transaction value in the ordinary course of commerce is to be taken as assessable value. In the event where transaction value is rejected thereafter Custom Valuation Rules need to be satisfied for enhancement of the value. In the instant case no basis of such re-assessment can be made out as the department has failed to warrant reasons for rejection of transaction value in the first place. It is observed that rejection of value declared on a Bill of Entry is a serious action that should be supported by compelling provision, evidence and justifiable reasons. Rule 5 is to be read subject to Rule 3 which should be read with Rule 12 of the Customs Valuation Rules, 2007 which brings us down to the very essence of the Valuation Rules that in order to re-determine assessed value, transaction value should be rejected based on cogent reasons and evidence. The transaction value of the appellant has been rejected merely on the ground that similar goods have been imported at higher value at various other custom stations without providing any evidence in support of their claim and failing to examine the applicability of Rule 12 of Customs Valuation Rules in the present case. It is found that neither the Adjudicating authority nor the Commissioner (Appeals) have established such circumstances as prescribed by law for rejection of transaction value and rejected it merely on the ground that goods have been imported at a higher value without properly examining the applicability of Rule 5 read with Rule 12 of Customs Valuation Rules, 2007. In the present case no effort was made by the adjudicating authority to ascertain quality, quantity and characteristics of the goods of the contemporaneous import, the authorities have failed to carry out any test to ascertain that the goods of contemporaneous import are similar under what circumstances. Only reports of NIDB have been relied upon. No assessment with regards to comparable quantity and quality of the goods have been established by the Department when re-assessing the value of the said goods. Based on the facts we note that the data relied upon by the department does not wholly correspond to the time at which the investigation was conducted and different parameters ought to have been considered while adjudicating upon such serious allegations. Penalties - HELD THAT - The department in its show cause notice issued to the appellant has not raised any discrepancy towards the declared quantity of goods in order to attract confiscation under Section 111(m) of the Act. Neither from the records is it evident that any misdeclaration of value in respect of any entry has been made under the Customs Act nor was the Commissioner (Appeals) able to adduce any evidence regarding their claims - Reliance on the tribunal judgements in the case of WEST COAST PAPERS MILLS LTD. VERSUS COMMISSIONER OF CUSTOMS, CHENNAI 2000 (10) TMI 478 - CEGAT, CHENNAI has been correctly placed as the Hon ble Tribunal has observed that penalty is not sustainable when bonafide of the importer are not in doubt and there is no intent to mis declare the goods - In this view confiscation of the goods does not sustain and is set aside. The impugned orders are set aside - appeal allowed.

Summary

Issues Involved:
1. Rejection of Declared Value and Re-determination of Value under Customs Valuation Rules, 2007.
2. Alleged Contravention of Section 14(1) of the Customs Tariff Act, 1975.
3. Alleged Contravention of Section 11 of the Foreign Trade (Development and Regulation) Act, 1992.
4. Alleged Contravention of Section 46 of the Customs Act, 1962.
5. Confiscation and Imposition of Penalty under Sections 111(m) and 114A of the Customs Act, 1962.

Summary:

1. Rejection of Declared Value and Re-determination of Value:
The original adjudicating authority rejected the value declared by the appellant and re-determined the value of goods as per NIDB data under the Customs Valuation Rules, 2007. The appellant challenged this assessment, arguing that the lower authorities erred in invoking Rule 5 without any grounds for rejection of the declared value. The Tribunal observed that the rejection of transaction value must be supported by compelling provisions, evidence, and justifiable reasons. The Tribunal cited the Supreme Court's decision in Eicher Tractors, emphasizing that transaction value should be accepted unless specific exceptions apply. The department failed to provide cogent reasons or evidence for rejecting the transaction value, merely relying on higher values of similar goods at other customs stations.

2. Alleged Contravention of Section 14(1) of the Customs Tariff Act, 1975:
The appellant was accused of suppressing the actual price of the imported goods, violating Section 14(1) of the Customs Tariff Act, 1975. The Tribunal found no evidence to support this claim, noting that the department did not provide any proof that the declared value was incorrect.

3. Alleged Contravention of Section 11 of the Foreign Trade (Development and Regulation) Act, 1992:
The Commissioner (Appeals) held the appellant in contravention of Section 11 for allegedly not stating the true value of the imported goods. The Tribunal found no evidence to support this allegation, noting that the appellant had submitted all relevant documents, which were assessed by the assessing officer.

4. Alleged Contravention of Section 46 of the Customs Act, 1962:
The appellant was accused of not declaring relevant information while filing the bills of entry, violating Section 46 of the Customs Act, 1962. The Tribunal found that the appellant had filed all relevant details, and the department had no evidence to support their claim.

5. Confiscation and Imposition of Penalty under Sections 111(m) and 114A of the Customs Act, 1962:
The Commissioner (Appeals) held the goods liable for confiscation and imposed a penalty on the appellant under Sections 111(m) and 114A. The Tribunal found that the department did not raise any discrepancy towards the declared quantity of goods to attract confiscation under Section 111(m). The Tribunal cited previous judgments, noting that penalties are not sustainable when the bonafide of the importer is not in doubt, and there is no intent to mis-declare the goods. Consequently, the confiscation and penalties were set aside.

Conclusion:
The Tribunal set aside the impugned orders and allowed the appeal with consequential relief to the appellant, emphasizing the need for cogent reasons and evidence to reject transaction values and impose penalties. The Tribunal highlighted the importance of following the detailed methodology outlined in the Customs Valuation Rules, 2007, and ensuring that any rejection of declared value is supported by substantial evidence.